St. Luke official explains error uncovered in audit
Staff reporter
Auditors of Marion County Hospital District No. 1 reported June 27 to the board of directors that an error had been found in posting of a journal entry.
Chief financial officer Hilary Dolbee explained that $300,000 was "double posted" in 2003 as a journal entry of accrued vacations after Banner HealthSystems discontinued management and the district began.
The error was found during a routine audit, she said.
Annual audits had not been conducted since 2003 because of the transition. The most recent completed audit was for 2005, at the completion of the first full year in which the district was an independent operator. From now on, annual audits will be conducted, Dolbee said.
As a result of the error, more expenses were reported more than actually occurred.
"The bottom line or net profit of the hospital is better now, after audit adjustments," Dolbee said, "but the down side is the $406,000 the district received from Medicare was based on the erroneous expense amount."
Dolbee said the hospital will not know the amount of reimbursement the hospital may have to return until Medicare completes final reports, which should be within the next few months.
"We may owe them or they may owe us," she said.
Dolbee said hospital officials anticipate an audit from Medicare within the next couple of years because of the hospital's critical access status. Critical access hospital, receive cost reimbursement from Medicare.
Dolbee said the district finished 2005 in the black. The primary reasons for finishing with a profit margin were that a donor had contributed a "substantial" amount of money to St. Luke Hospital Foundation and that tax revenues from residents within the hospital district had increased.
"Without those two factors we would not have been in the black and in a different position," said Dolbee.
Operations of the hospital continue to lose money.
"We always have two nurses on duty, whether we have patients or not," Dolbee said.
By expanding existing services and adding new ones, the hospital has a better chance to increase the number of patients and the amount of treatment provided.
Recent investments in equipment and additional in-house services in the lab will provide additional services to patients.
"We don't want people to get sick but want people who are sick to come to St. Luke for treatment," Dolbee said.
Dolbee and hospital officials are taking other measures to watch the bottom line. A review of expenses, contracts, and personnel hours is being made.
The budget process for 2007 has begun.
"We're always looking at ways of becoming more efficient," Dolbee said.
The hospital belongs to a purchasing group.
Departments are sharing employees, and some employees are working a combination of part time positions in different departments.
"There are no plans to lay off anyone," Dolbee said, "but we are monitoring the hours. Everyone is diligent about avoiding overtime."
Taxpayers may get confused that the hospital district having a million dollars spread out in CDs in banks within the district. Dolbee explained that having money in savings was necessary.
"For accounting and business purposes, most businesses want 'days cash on hand' to be six months," she explained. "It's like an emergency plan."
Currently the district's million dollars could sustain the hospital for 90 days, which is satisfactory, Dolbee said.
"This money is set aside in case all revenue streams cease," she said. "It's reserve capital so the hospital could continue to operate."
Rehab Visions recently was contracted to oversee the physical therapy department.
Two certified physical therapy assistants, currently St. Luke Hospital staff, will be offered positions by the hospital or Rehab Visions, Dolbee said.
"Our goal is to have one or two physical therapists here on a full time basis," Dolbee said, in addition to the current two assistants.
An added benefit is that Memorial Hospital of McPherson also has a contract with the same company for services. This could enable sharing of facilities and staff.
